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The Big Question: Is the Fed too powerful?

Peter Navarro, professor of economics and public policy at U.C. Irvine, said:

The Fed does not have too much power; it has too many powers.  It has strayed from its mission of controlling the money supply so as to insure full employment with price stability.  The worst symptom is the bloating of its balance sheet as it has become “bailout central.”  An independent Fed is critical but any Fed is only as good as its chairman and only two – Volcker and McChesney Martin – have served this country well since the 1960s.

Dean Baker, co-director of the Center for Economic and Policy Research, said:

It is remarkable that, after allowing the housing bubble that caused this economic disaster, the Fed has seen little change in its status. It would be difficult to immediate another federal agency failing in such a disastrous way and still facing no consequences.

Any competent economist should have been able to see the $8 trillion housing bubble. And, they should have known that its collapse would be devastating to the economy. Nonetheless, the Fed let it grow unchecked. Now, its collapse has given us the worst downturn in 70 years. If HUD or HHS ever failed to the same degree, they would be shut down. Instead, the Fed is being given more power.

It is worth noting that the Fed will be reined in one important respect. It is being required under the Sanders amendment to submit to an audit and to publicly disclose the terms of the $2 trillion plus lent out through its special lending facilities. It had vigorously fought this disclosure both in lobbying Congress and in contesting a suit filed by Bloomberg News Service through two levels of the federal judiciary (the Fed lost both times and is now appealing to the Supreme Court).

It had to be very disconcerting to the Fed that it could not beat back this amendment, even with the strong support of the Obama administration. In the end, when it was clear that the bill was going to pass, every single member of the senate voted for it because they wanted to be seen as working to rein in the Fed. This speaks volumes about the Fed’s popularity, or lack of it.

Justin Raimondo, editorial director of Antiwar.com. said:

The Fed created the current crisis, and now we’re told only the Fed can lead us out of it. They created the bubble, and they are strenuously trying to keep it inflated. What they’ll succeed in doing is merely prolonging the economic “recession,” which is in reality — as everyone is beginning to discover — a depression.

The “independence” of the Fed? Don’t make me laugh. The Fed is run by the very same crooks they bailed out to the tune of trillions — yes, trillions — of taxpayer dollars. It was and is the biggest rip-off in history, and they’re pulling it off all the while singing praises to the vaunted “independence” of the Fed.

Bernie Sanders, the alleged “socialist,” is doing the bidding of Wall Street in watering down Rep. Ron Paul’s original legislation, which would have set in place the continual monitoring of Fed subsidies to favored players. The Sanders revision also would exclude monetary transactions with foreign banks from public scrutiny — so that when the bailout of Greece, Spain, Portugal, and Italy is paid for by US taxpayers, the American people will be none the wiser.

We don’t just need to audit the Fed, we must end it.

Damon N. Spiegel, entrepreneur and writer, said:

If it wasn’t for the Federal Reserve today our economic situation would mean near death for the United Sates. Could you imagine our congressmen and women trying to figure out how to get us out of this financial crisis?  How much money to print or what do to with interest rates?  Our Congress handling economic policy would be during our financial crisis would be…inconceivable.  A few hundreds lawyers in one room all professing to be economic experts and suggesting proclamations of economic stability?  Could you imagine?  While the Federal Reserve has made its mistakes and mostly in hindsight the Federal Reserve was created to be an independent, non-partisan entity and with powers limited  to handling the central banking functions of the United States.  They have the power to create money (through various means, loosening monetary policy) or change interest rates.  Considering what has occurred these past 24 months I believe they have done as good as a job can be done given the circumstances.

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